Curtis R. Price

Endowment effects in contests

We experimentally study overbidding in contests and find that overbidding is significantly higher when subjects are given a large per-experiment endowment rather than when the endowment is given per-period. Risk-aversion and non-monetary utility of winning can partially explain our findings.

Endowment Origin, Demographic Effects and Individual Preferences in Contests

In modern firms the use of contests as an incentive device is ubiquitous. Nonetheless, experimental research shows that in the laboratory subjects routinely make suboptimal decisions in contests even to the extent of making negative returns. The purpose of this study is to investigate how earning the endowment, demographic differences and individual preferences impact behavior in contests. To this end, we conduct a laboratory experiment in which subjects expend costly resources (bids) to attain an award (prize). In line with other laboratory studies of contests, our results show that subjects overbid relative to theoretical predictions and incur substantial losses as a result. Making subjects earn their initial resource endowments mitigates the amount of overbidding and thus increases efficiency. Overbidding is linked to gender, with women bidding higher than men and having lower average earnings. Other demographic information, such as religiosity, and individual preferences, such as preferences towards winning and risk, also influence behavior in contests.

Gender, Competition, and Managerial Decisions

The purpose of this study is to investigate the use of competitive compensation between a manager and a worker in the laboratory. To this end, we impose a simple agency relationship between two groups of subjects termed managers and workers. The manager chooses a compensation scheme for the worker from either a piece rate or a tournament payment scheme and is paid based on the workers performance in the task. The results indicate that when given information about worker ability, male managers choose the tournament significantly less often for a female worker. On the other hand, when no information about worker ability is given to the manager, there is no difference in compensation choice for the worker, although male and female managers differ significantly in their own preferences for compensation scheme. We conjecture that these results are tied to the fact that there is a measurable stereotype that females are worse at the task relative to males, although further research is needed in this regard. This paper was accepted by Brad Barber, Teck Ho, and Terrance Odean, special issue editors.

Will S(He) Sabotage Me? Team-Dynamic Effects of Compensation Schemes

This paper contributes theoretically and empirically to understanding the nature of interdependence among team-members under different schemes of compensating team-members. Theoretically, the device of a Proportional compensation scheme is designed to uncover the innate nature of interdependence. Empirically, data from an Experiment reveal that: 1) Assistance is the innate nature of interdependence; 2) Sabotage is the preferred mode of interdependence under the Bonus scheme, and assistance under the Egalitarian scheme; 3) Females engage in sabotage at a significantly higher rate in the Egalitarian scheme - which is actually designed to incentive assistance – and to a lesser degree in the Proportional scheme compared to males; and 4) Incentivizing assistance does not pay off.

Does the Gender Preference for Competition Affect Job Performance? Evidence from a Real Effort Experiment

Previous experimental evidence has documented that competition may enhance the performance of male subjects relative to female subjects in some tasks. In these studies competition in wages is imposed exogenously by the experimenter. This note describes data for a task where a simple agency relationship is established in the laboratory between two groups of agents, managers and workers. The managers make the compensation choice for the worker from either a non-competitive piece rate or the competitive tournament payment scheme. The results show that even though male subjects are better at the task this advantage dissipates when the competitive compensation scheme is chosen for them by the manager. Evidence also suggests that the gender of the manager may be an important facet of the agency relationship.

Changing Promotion Standards - Data from the National Longitudinal Survey of Youth

Few studies of promotion have focused on large panel data sets. Notable exceptions have focused on the popular data set from the National Longitudinal Survey of Youth 1979 cohort (NSLY). Data from the NSLY have been utilized in at least four studies of promotion standards, with the finding that women are held to higher promotion standards than otherwise equally qualified men. All of these studies have utilized older data from the 1984-1990 survey years of the NLSY. During these years the subjects in the survey were between the ages of 19-33 years old. I explore the differences in promotion with data from the most recent survey years from 1996-2006, where subjects are now between the ages of 31 and 46. The findings indicate that although there was strong evidence of promotion disparity in the early years of subject’s working careers; these effects have lessened as they have entered the prime working years. Additionally, we explore the wage gains attached to promotions. While the data from the subject’s early working career show wage gains attached to promotion that favor women, the more recent data shows no discernable difference in wage gains attached to promotion.